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andrezito [222]
2 years ago
5

Consider a call option on an asset with an exercise price of $100, a put option on that same asset with an exercise price of $10

0, both expiring at the same time. Assume that at the expiration, the current market price of the asset is each of the following two values. Explain what happens from the perspective of the long position for each of the two options.
Business
1 answer:
zubka84 [21]2 years ago
5 0

Answer: The values are missing below are the values

a. $105

b. $95

answer :

a) $5

b) -$5 ( loss )  

Explanation:

From the perspective of the long position for each of the two options  upon expiration

a) For $105

for the long position ( long call ) since the expired price > than the exercise price

i.e. $105 > $100 the profit = $105 - $100 = $5

b) For $95

For the long position ( long call ) since the expired price < than the exercise price

i.e. $95 < $100 the profit = $95 - $100 =  - $5  ( a loss is incurred )

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Explanation:

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The following data are available for the Phelps Corporation for a recent month: Product A Product B Product C Total Sales $ 150,
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Answer:

$277,000

Explanation:

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<u>Determination of Break-even Sales</u>

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Therefore, Solving Algebraically

Sales = Variable Expenses + Fixed Expenses

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Therefore Break-even sales for the month for the company is closest to $277,000

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3 years ago
Aaron is proud of the traits associated with his countrymen. They are generally perceived as adventurous with a pronounced incli
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Answer:e) uncertainty avoidance

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6 0
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Let’s see how fees can hurt your investment strategy. Let’s assume that your mutual fund grows at an average rate of 5% per year
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Answer:

We notice that the more the fees increase for a constant rate of return, the number of years it takes to double on the investment also increases. For example;

a). 15.6 years

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c). 28 years

Explanation:

The rule of 70 is a formula that can be used to estimate the number of years it will take an investment to double up.The formula is expressed as;

Number of years to double=70/Annual rate of return

a). Given;

Annual rate of return per unit of investment=5%

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Net rate of return=Annual rate of return-Annual fees=(5%-0.5%)=4.5%

Replacing;

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b). Given;

Annual rate of return per unit of investment=5%

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Replacing;

Number of years to double=70/Net rate of return

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c). Given

Annual rate of return per unit of investment=5%

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Net rate of return=Annual rate of return-Annual fees=(5%-2.5%)=2.5%

Replacing;

Number of years to double=70/Net rate of return

=70/2.5=28.0 to nearest tenth=28 years

We notice that the more the fees increase for a constant rate of return, the number of years it takes to double on the investment also increases

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3 years ago
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